First mortgage or Home Equity Loan

Paying for College
1

I’m going to refinance my house. My son is currently a high school junior. I’ll be able to pay off some credit cards when I refinance. I’ll get a better rate if I have a first mortgage at 80% LTV and a home equity line of credit at 10%, then a first mortgage at 90%.

But I’m wondering if fasfa will recognize the second mortgage. Perhaps for the purposes of fasfa I’m better off with one mortgage at 90%.

2

The FAFSA does NOT include ANYTHING about your primary residence…not the equity, not the mortgage, nothing.

There are Profile Schools that consider home equity in your primary residence. But you know…you are putting the cart before the horse.

Will your son get accepted to a college that guarantees to meet full need for all accepted students? Because…if not…this just might not matter as there is no guarantee the school will meet your need anyway.

3

As long as it is your primary residence, it doesn’t matter how it is financed or even paid off. Actually, it doesn’t matter if it is a second home either as you just list the equity in the property as an asset.

4

I’m confused by the two replies. You’re two answers seem to contradict one another.

5

@Amherstal
Is this the house you live in? Is this your home, primary residence??

The replies are the same.

  1. Your primary residence is NOT NOT considered or mentioned at all on the FAFSA. So if this is your primary residence, it doesn’t matter ONE BIT how you finance it for FAFSA purposes. It doesn’t matter how much it costs or how much you owe...it’s not on the FAFSA.
  2. @twoinanddone mentioned a second home...if you have a second home or other piece of real estate (e.g. land or a rental property....or if YOU don’t live in that house you are talking about) then the EQUITY in that house is what is used as an asset. Your form of financing doesn’t matter at all.
  3. And I mentioned schools that use the CSS Profile...because those schools DO ask for primary home equity onnthe Profile.